Déjà vu All Over Again In Private Label/Brands Saga

Articles
November 24, 2009

Déjà vu All Over Again In Private Label/Brands Saga

Déjà vu All Over Again In Private Label/Brands Saga

Grocery prices in October posted their largest decline in 50 years according to a Food Institute analysis of newly released government data. The Consumer Price Index for food-at-home last month was 2.8% less than the same month last year even though it posted a slight increase from the prior month. As a result, the annualized food-at-home inflation rate through Nov. 1 was just 1.1% and will likely be only slightly higher than that level at year’s end. That would put 2009’s food-at-home inflation rate at the lowest level since 1992 when it inched up less than a percentage point.

While lower prices for commodities last year certainly contributed to reduction in the food price index, increased competition among manufacturers for shelf space has also played a role. And part and parcel of that is the intense competition between private label and branded food manufacturers. Private label brands now account for one of every five items sold in U.S. supermarkets, drug chains and mass merchandisers, according to The Private Label Manufacturers Association whose annual trade show was held last week.

This is far from a new industry issue however.  Looking back 50 years ago when food price DEFLATION was also the talk of the industry, The Food Institute found that the battle between private label and branded manufacturers may have been in its infancy but still spurred concern. In a Food Institute Report from 1959 then president of Libby McNeil, a major canned food maker, had this to say:

“Promotion of private and controlled brands was strong and competition between these and nationally advertised brands remains a major challenge which we are continuing to meet with an intensive program of advertising and promotion.” 
                                                               – Charles S. Bridges president Libby McNeil & Libby.

“Promotion of private and controlled brands was strong and competition between these and nationally advertised brands remains a major challenge which we are continuing to meet with an intensive program of advertising and promotion.” 
                                                               – Charles S. Bridges president Libby McNeil & Libby.

And today of course as private label and branded food manufacturers continue to vie for shelf space and in this current economy that can spell lower prices for consumers.

So as Yogi Berra, said “This is like deja vu all over again."

For more on the economic condition of the food industry, don’t forget to turn to the Food Institute.